Buy Gold With a Credit Card
Buying Gold With A Credit Card Can Cost You Money
Many of us, when looking to buy gold, want to use a credit card. There are myriad reasons we prefer using a credit card when buying gold: fraud protection, ease of use and reward points to name a few.
Well, using that credit card to buy gold online may just cost you hundred, if not thousands, of dollars. Let me explain this from a gold dealer’s perspective. When you buy gold with a credit card, the dealer is running the risk of a fraudulent purchase. Not because you are going to try to rip them off, but because there is always some wiseguy out there purchasing bullion with a credit card and then disputing the purchase. This can be very costly and charge backs can be filed (depending on the credit card) for up to 180 days, and is a big headache for any dealer. Think about this: the dealer could ship product out the door and, half a year from now, find out it was fraud and they are out the money. When someone steals another person’s identity or credit card and makes a purchase with it the gold dealer is the one left holding the bag. For this reason many gold dealers no longer accept credit cards, as the risk is just too high.
There are those of us who like using a credit card to buy gold for the reward points. This is a fine idea if your total purchase is around $3,000 or less, and here’s why: let’s say you’re looking to buy ten 1 oz gold coins. At the time I am writing this article that would cost around $17,000. Well, the gold dealer is going to pass the cost of processing the credit card payment on to you, the buyer, since gold dealers earn very small margins on gold. (link: gold dealers make very small margins on gold – to the reputable gold dealers article) Processing fees for credit cards vary between 1.9% – 2.9%, but most dealers are going to charge a little more than their processing fee to counter fraudulent purchases. So let’s say the dealer is charging 2.9% for you to buy gold with a credit card. That’s $493 you’re spending just to use a credit card; that means you just spent an additional $49.30 per coin! I can assure you, you’re not getting near this in reward points. This is a very high price to pay for not going to the bank and performing a bank wire transfer.
Buying gold with a bank wire transfer will cost between $10 – $30 depending on the bank you use. This can save you a lot of money and get your package shipped to you faster as most dealers ship bank wire orders right away.
I hope this article has help you understand how buying gold with a credit card to cost you money.